A ban on promoting the price of baby milk should be lifted to prevent parents from “paying above the odds” for formula, a government watchdog has suggested.

Interim Report of the Competition and Markets Authority (CMA) On infant milk formula it was said the market needed to change to help parents struggling to afford it.

Recommendations included the government releasing NHS-branded infant milk and removing branding from infant milk in hospitals.

It stopped short of recommending price controls, but said it remained a possibility, with parents “bearing the costs” of price increases in the market over the years.

“We are concerned that companies do not compete strongly on price and that many parents – who are choosing infant formula in vulnerable circumstances and without clear information – opt for more expensive products, the better for their baby. Combine high cost with quality,” said. Sarah Cardell, chief executive of the CMA.

Only three companies – Danone, which makes Aptamil and Cow & Gate, and Nestlé, which makes SMA, and Candamil – control more than 90% of the UK market.

The report found that in the two years between December 2021 and December 2023, infant formula prices in the UK rose by between 18% and 36%, depending on the brand.

The report found that parents could save up to £500 in a baby’s first year of life by switching to a lower-priced brand.

Currently the market is regulated so that promotions such as loyalty points or discounts are banned in the same way as they are for tobacco and lottery tickets.

This is to encourage breastfeeding, which the NHS says is healthier for babies, but the CMA said it was concerned it prevented companies competing on price, which would have the “unintended consequence” of Meaning “consumers will pay higher prices”.

It added that “allowing publicizing of prices and price cutting” would promote price competition.

It found there was “little pressure” on companies to protect customers from rising manufacturing costs, which has largely been passed on quickly and completely.

Despite these rules, Asda started allowing loyalty points to be used to buy baby milk from January. Iceland has also raised its voice against this rule.

The regulations also require that all brands of infant milk formula, including supermarket brands, must not differ significantly in terms of base ingredients.

However, the CMA is concerned that companies use words such as “advanced” to differentiate their products, making it difficult to assess their quality.

It added that this “risks undermining the important public health message that all infant formulas meet nutritional needs” regardless of brand or product.

The CMA also made several other recommendations and suggestions:

• Companies must clearly differentiate their infant milk brands from their follow-up milk brands for infants after six months, as it is concerned that “brand reputation plays a large role in decision making”.
• The government could buy formula from a third party and sell it at a lower price under NHS branding
• Existing rules should be strengthened so that they also apply online
• Parents should have access to “clear, accurate and unbiased information, including on nutritional adequacy, at the point of sale”.
• The NHS should do even more to provide information in a “timely” manner, such as the fact that follow-on milk is not necessary
• Standardized formula packaging should be used in hospitals to prevent people associating a particular brand with hospital authority

Price controls such as caps are “not currently recommended”, but the CMA said that if implemented they could “bring prices directly down”.

Baby formula manufacturer Hypp Organic UK said it has been reassured that price caps are not being recommended because “these are unlikely to support families and sustain a sustainable industry”.

The CMA launched its investigation after becoming concerned about the rising prices of infant milk and is expected to publish its final report in February next year.

A spokesperson for Danone said it “agrees with the CMA that the information parents receive in health care settings should be focused specifically on the differences between infant formula and infant formula”.

A Nestlé spokesperson said it would “continue to work constructively with the CMA as they further explore the market consequences”.